Societe Generale Profits Decline in First-Quarter

French bank Societe Generale on Thursday reported a 1.9% drop in first-quarter net profit, as higher operating expenses offset strong growth at its international retail division.

Net profit slipped to 1.43 billion euros ($1.94 billion) from 1.46 billion euros in the same period in 2006. The result was below analysts' expectations of 1.46 billion euros ($1.98 billion).

The Paris-based bank, thought to be an attractive takeover target for a major international bank, said in a statement that economic conditions remained generally favorable in the quarter "albeit more uncertain in the U.S., particularly in the real estate sector."

Shares of the Paris-based lender have soared more than 10% in recent weeks amid speculation that it may have started preliminary talks with its Italian peer UniCredit. SocGen shares were down 2.72% at 148.76 euros ($201.35) in early Thursday trading.